The Helium Problem Is Real and Immediate
Qatar produces about a third of the world’s helium , a gas central to semiconductor manufacturing, and the conflict has disrupted both Qatari LNG production and the helium extracted alongside it, while simultaneously closing the Strait of Hormuz as a shipping corridor.
What makes helium so critical to chip-making specifically: its unique properties as an inert gas and high thermal conductor make it ideal for preventing unwanted chemical reactions and ensuring precise control of wafer temperatures. The gas is used to cool wafers during etching and deposition, and to cool lithography light sources.
And critically , helium does not have an artificial substitute. It cannot be cooled to temperatures as low as any other element, down to just a fraction above absolute zero, which makes it unique across a range of high-tech applications. It also remains chemically inert, so it doesn’t contaminate chips or materials it contacts.
The Supply Math
There are three helium plants in Qatar, and two of them produce helium from waste gas from LNG plants. When the Strait of Hormuz is closed and LNG storage tanks fill up, the plants have to shut down. Military strikes on Qatar’s facilities compounded this further.
The net shortage is meaningful but not yet catastrophic: with a 30% loss of global capacity offset by a recent 15% supply overhang, one industry consultant estimates a net shortage of around 15%.
Price-wise, spot helium prices have surged between 70% and 100% in some cases within just over a week, according to Phil Kornbluth, president of Kornbluth Helium Consulting, who has been in the business more than 40 years.
Taiwan and South Korea Are Most Exposed
South Korea and Taiwan, the world’s two largest semiconductor makers, are particularly vulnerable. In 2025, South Korean manufacturers bought 55% of their helium from GCC countries. Taiwan bought 69% of its helium from the GCC in 2024, according to Barclays analysts.
The wafer cost implications are stark: fabrication facilities are facing significant challenges securing critical cooling for advanced 3-nanometer and 2-nanometer chips, and the baseline manufacturing cost of a single wafer using 3nm technology stands at around $20,000 under standard conditions — before any helium premium is applied.
It’s Not Just Helium
The Strait of Hormuz closure simultaneously pressures aluminum prices, with Middle Eastern aluminum representing approximately 22% of global supply excluding China. Bromine, used in circuit board formation, faces a parallel concern: South Korea sources 90% of its bromine imports from Israel, a party to the conflict.
The Rerouting Problem
Rerouting existing supply around the Strait via the Cape of Good Hope adds approximately 3,500 nautical miles per voyage, roughly $1 million in additional fuel costs, and 10-14 days to transit times. Helium must be transported in specialized cryogenic ISO containers maintained at -268.9°C and these containers can keep helium in liquid form for only 35-48 days before it begins warming and escaping through pressure release valves.
The Recovery Won’t Be Fast
Even if the strait opened tomorrow, the supply disruption would last at least two additional months. Major suppliers will likely declare force majeure and raise prices, following the playbook of the four previous helium shortages over the past 20 years.
With no clear way to open the strait, no timeline for when efforts might begin, and no indication that any of the parties involved want to start the process, the Strait looks set to remain closed for the foreseeable future.
The Bottom Line for the Chip Industry
Chipmakers are likely to be protected from the worst of it , suppliers are expected to prioritize critical applications, but even semiconductor buyers at the front of the line will see price hikes. “The industrial gas industry won’t play favorites to a large degree. They’ll do their best to keep everybody as well supplied as possible, but there’s a price for that,” Kornbluth said.
The deeper issue the newsletter is pointing at is real: decades of just-in-time supply chain optimization created single points of failure in places nobody was watching. A 24-mile-wide waterway now has more leverage over the global AI buildout than almost any other variable.